KILLING ANOTHER GOLDEN GOOSE?

Amid all the baby kissing, five-second sound bites and promises to out-bland each other, this election campaign has once again brought up the debate on population growth and our permanent and temporary immigration policies. Both major parties are stepping away from the idea of a Big Australia by advocating a reduction in immigration intake levels to curb population growth. This would have many implications across for the economy, including impacting on overall economic output, availability of labour, construction activity, urban planning and provision of housing. In this newsletter we shall look at one type of temporary visitor, students, and their effect on the economy.

What we have attempted to avoid in our newsletters to date is to bombard our dear readers with dry economics, as fun as theses on the circulation velocity of monetary aggregates might be. However, let us have a bit of a look at some of the numbers in the education sector, in particular the exporting of education.

According to Department of Immigration and Citizenship statistics in 2009/10 the total planning level for permanent migrants was 168,700 persons (excluding New Zealand citizens), which is the same for 2010/11 and a slight decrease from the 2008/09 outcome of 171,320. Of the 2009/10 figures, the highest proportion was for skilled migrants (64%). Typically the skilled migrant program represents between 60-70% of the total intake, with the significant majority of the remainder being family sponsored migration.

As of 30 June 2009 there were some 918,647 temporary entrants present in Australia, mainly comprising students, tourists, short and long term business visitors, those visiting relatives and those visiting for medical treatment. Those on student visas comprised 386,523 persons at that time, or 42% of temporary entrants. The number of student visas that were granted in 2008/09 was 320,368, an increase of 12% per annum between 2002/03 and 2008/09. However the number granted in 2009/10 decreased from the previous year to 269,828 student visas.

Chinese students represented the biggest intake in 2009/10, with 54,409 student visas granted (20%), followed by Indian students (11%) and South Koreans (6%). The level of Indian students dropped by more than half from the 2008/09 level, impacted by the negative publicity surrounding attacks on Indian students. This drop of almost 36,000 Indian students between was the main contributing factor to the decline in visa grants between 2008/09 and 2009/10.

Higher education (44%) and Vocational Education and Training (27%) were the main areas of study for international students.

But how do international students contribute to the economy? Firstly they provide a direct injection of revenue into the education sector. The ABS data on international trade in services reveals that credits from the education sector equated to almost $18 billion in Australia in 2009. Education is Australia’s third largest export after coal and iron, comprising some 6% of all exports.

International students also generate economic activity through their expenditure while in the country and drawing visitations from their family and friends. Tourism Research Australia’s International Visitor Survey (March 2010) reported that the average expenditure for a visitor whose main purpose was education was $14,929 per trip, primarily on education, accommodation and food and beverages. Based on the number of student visa entrants in Australia as at June 2009, this equates to some $5.8 billion of expenditure. International students would visit tourist facilities, shop, utilise public transport, purchase housing and take up seasonal or casual employment, often in sectors shunned by the domestic labour force. They also provide a ready resource of skilled migrants with localised experience upon the completion of their studies.

A tighter immigration policy is likely to include limiting temporary and permanent immigration. Student visas have been referred to by politicians in the campaign as a large sector and one that may be reduced. So with the policy of the Resource Super Profits Tax being called killing the goose that laid the golden egg, are we endangering the education goose with talk of reducing student visa levels? With all these trite comments of moving forward to turn the boats around dominating the campaign, it is difficult to gauge the major parties’ precise intentions for immigration policy. It is a vastly complex situation with massive economic implications for Australia. The international student sector is a major contributor to the economy and limitations on this sector would impact upon the wider community, in much the same way as limitations on the mining sector would be felt throughout the economy.